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updated: 3/18/2014 6:53 AM

Hertz spinning off its equipment rental business

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Associated Press

NAPLES, Fla. -- Hertz plans to spin off its equipment rental business into a separate publicly traded company.

The car rental company says it will receive about $2.5 billion in proceeds, which will be used to pay down debt and to support a new $1 billion stock buyback.

The new business will be called Hertz Equipment Rental Corp. The spinoff will leave Hertz with the Dollar, Thrifty, Hertz and Firefly rental car businesses and Donlen, which provides fleet leasing and management services.

Its board has approved the separation plans. Mark Frissora will remain Chairman and CEO of Hertz.

The equipment rental company will determine its management and board as separation plans are finalized.

Hertz Global Holdings Inc. anticipates the spinoff closing by early next year.

Its shares rose more than 2 percent in premarket trading.

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